Many restaurant chains across the country have cut staff perks in response to the increase in the minimum wage to £7.20 an hour for over-25 year olds, which went into effect on April 1. Earlier this week, Zizzi, an Italian food restaurant chain, cut the amount waiters can receive from credit card tips and service charges from 70% to 50%.

The government said 80% of consumers want tips go directly to workers or distributed among staff.

Business Secretary Sajid Javid said the government wants “workers who earn a tip to be able to keep it. That’s why I, like many others, was disappointed by the tipping practices of some of our well-known chains. This has to change.

“Today I’m setting out our proposals to make tipping fairer, clamping down on unfair practices and securing a better deal for the millions of workers in the service industry.

“We will look closely at all the options, including legislation if necessary,” Mr Javid said.

The Unite union, which has been at the forefront of a campaign to stop restaurants charging fees to administer tips, said the report was a “massive, rightful victory”.

Dave Turnbull, Unite’s officer for the hospitality industry, said:

“This is fantastic news. It has taken us eight months to get this report to conclude but at long last it has come down on the side of the waiting staff.

“It is a massive victory for all those waiting staff who have worked tirelessly to expose sharp practices in the hospitality industry. All they want is what any worker wants – to take home what they have earned, no corners cut.

“But it will need the support of law to make this happen – it is patently obvious that too many employers do not respect the spirit or word of the voluntary code.

“This should be great news for consumers, too, who have been appalled to learn that the tips they left for their waiter or waitress never made it to them. Diners have been a huge support to the workforce – without their help we may not have ever won pay justice.

“The problem has always been that tips paid on a credit card and service charges are deemed the property of the employer. Until staff are recognised as the lawful owners of their hard-earned tips with complete control over how they are shared out, rogue employers will continue to cream off staff tips.”

The British Hospitality Association (BHA) chief executive Ufi Ibrahim told the BBC: “Transparency is precisely what we asked the government to consider.

“Customers should be able to reward good service and know where their money ends up and how much of it goes to the staff.

“Over the coming few weeks, we will convene a series of meetings with hospitality business leaders across the UK and conduct our own impact assessment, to deliver a unified and robust response to inform the government’s decision making process.”